Grain heads for boom year

ON THE FARM

June 29, 2008|By TED SHELSBY

This could be the year that state grain farmers buy that flashy new pickup truck they have been eyeing for a couple of years.

Due primarily to recent floods in the Midwest, "Maryland grain farmers are looking at a huge payday this year," says Kevin McNew, a managing partner of Go Grain LLC, a commodity research firm in Bozeman, Mont., and an adjunct professor at the University of Maryland.

"For Maryland farmers, things look great," he said. "It could be their best year ever.

"They are sitting on a corn crop that looks to be valued at $7 or $8 a bushel," said McNew. "Historically, prices have been in the $2- to $3-a-bushel range in Maryland."

The possible financial boon comes from floodwaters covering an estimated 2 million or more acres of corn and soybean fields in Iowa, Illinois, Indiana and other grain-producing states.

Fear of a short crop has sent world grain prices soaring in recent weeks.

"These are unprecedented times in the grain market," said McNew.

Lynne Hoot, executive director of the Maryland Grain Producers Association, said farmers here should expect a good year, and it's "going to help them make up for the bad year that farmers had last year."

As an indication of the fickle ways of Mother Nature, Maryland farmers last year suffered through the worst growing season since the drought of 2002, while their colleagues in the Midwest harvested their second-best corn crop on record.

In terms of yield per acre - the best way to measure the productivity of grain fields - Maryland farmers produced 103 bushels of corn from each acre planted last year. This was 28 percent lower than the harvest in 2006.

It was the lowest corn yield since the drought of 2002, when the state average was 74 bushels per acre.

"It is not over until it's over," said Hoot, "but it looks like we are going to have a crop this year."

She said that $8-a-bushel corn would result in a good profit for farmers, despite the rising cost of planting a crop.

"Some farmers have already contracted to sell their corn at $6 [a bushel] this year and they thought that was a good price," Hoot added.

The boon for grain growers will be putting a hurt on livestock farmers, including those raising chickens, hogs and beef. The vast majority of the corn and soybeans grown in Maryland goes to poultry producers and is made into chicken feed.

In other parts of the country, the grain is used to feed dairy and beef cows, and hogs.

Higher grain prices will be felt by the consumer in the form of higher prices at the supermarket, according to agricultural economists.

For the past two years, food prices have risen faster than the national inflation rate. Food prices were up 4 percent last year, and economists are predicting a 5.5 percent increase this year.

For this reason, Hoot added: "I hate to say it, but yes, it is going to be a good year for our farmers. It is about time they make some money."

It is too soon for farmers to start counting their dollars, warns state Agriculture Secretary Roger L. Richardson.

"We still have to bring the crop in," he said. "This time last year it looked like we were going to have a big crop and it didn't turn out that way."

Richardson explained that state farmers usually contract with the poultry companies to sell between a third and a half of their crop at an agreed price for delivery at a future date.

"It's a gamble," he said, explaining that if the farmer's crop is not large enough to supply the amount of corn agreed upon, the farmer would have to pay the poultry company the value of the corn not delivered.

Richardson said that farmers frequently have enough corn in storage to safeguard against not being able to meet a contract delivery. "But not this year," he said. "There is very little corn in storage.

"We do not affect the grain market," said Richardson, noting that grain production in the state is too small to impact prices.

State farmers harvested only 46.9 million bushels of the 1.3 billion bushels of corn harvested for grain in the U.S. last year.

"Farming is like going to the horse races," said Richardson. "It's a big gamble. People bet millions of dollars on Big Brown [in the Belmont Stakes]. They thought it was a sure thing and look what happened."

Teaching, timing

The University of Maryland's College of Agriculture and Natural Resources has established two new programs to prepare students in careers of agriculture and teaching agriculture.

One is an articulated double major in secondary education with a bachelor's degree in agricultural science and technology.

Students in this program, who complete a four-year degree, will be certified to teach agricultural science in Maryland high schools.

The second program is an integrated bachelor's degree in agricultural science and technology and a master's of education in curriculum and instruction.

"The timing of the establishment of both programs couldn't be better," said Leon Slaughter, associate dean for academic programs at the College of Agriculture and Natural Resources.

He said that one-third of Maryland's agriculture teachers are eligible for retirement in the near future.

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